transportation risk supply chain

It’s a Supply and Demand Issue

The risks within the transportation supply chain are evolving. They are volatile and only getting worse as demand far exceeds capacity. The transportation industry is struggling to keep up. Stakeholders along the supply chain all stand to lose margins and customer satisfaction when they can’t deliver product on time. The supply chain can grind to a halt waiting on freight that is held up due to a lack of trucks, weather events, natural disasters and other risks that play a role in just-in-time deliveries.

Our economy is dependent upon the synchronicity and dependability of the supply chain and transportation networks. As our culture demands more products faster and our enterprises are pressured to constantly innovate and produce, the demand for a responsive supply chain will only increase. The transportation supply chain is interconnected. The word “chain” illustrates the fact that no one segment of the supply chain works alone. Each is dependent on the segment before it. When one segment is broken, the entire chain falls apart.

Related: Supply Chain Risk Management Plan: What You Need to Include

Companies are trying to adapt. They are looking at the transportation supply chain to determine where they can gain control. Because so many of the transportation risks are unpredictable, at least by humans, they cannot be planned for effectively. For this reason, many organizations are looking to artificial intelligence to fill in the gaps where human intelligence is limited.

Visibility Is The Missing Link in The Supply Chain

Transportation risks run the gamut, from natural disasters to political unrest and terrorism, many events simply cannot be accounted for in time to mitigate risks to on-time delivery. Even as shipment demand exceeds the number of available trucks, deliveries must still make it to their destination intact and hopefully, on time. It’s the only way for the supply chain to hum along without disruption.

One of the biggest contributors to risk in the transportation supply chain is a lack of visibility. Companies don’t know what they don’t know and what they don’t know is quite a bit. So much so, experts recommend that in order to mitigate and manage risks, organizations must “improve network risk visibility, through two-way information sharing and collaborative development of standardized risk assessment and quantification tools.”

Understanding risk requires constant assessment and evaluation. Because of the nature of the supply chain, those risks are persistent and unique to each location. Freight doesn’t just travel from point A to point B; it travels along all points in between. Those points may each have their own risks, many of which are invisible to the naked eye until they occur.

In the past, for instance, unexpected weather events could instantly derail a shipment. It was relatively impossible for whichever segment of the supply chain was responsible for delivering their product to make accurate predictions of when their shipment would arrive. They relied on humans to look at the shipping lane and determine whether any inclement weather could hamper delivery. A person may base their decision upon a few pieces of weather data gathered from online sources. Without comprehensive, accurate data, this common practice puts the entire supply chain at risk.

Related: Using Supply Chain Predictive Analytics to Reduce Risk

Thankfully, technology is finally catching up, providing a new lens into the kaleidoscope of risks that plague the entire supply chain. When manufacturers, shippers, carriers and logistics companies leverage artificial intelligence, they can identify more risks sooner, giving them some much-needed time in preparing or altering a course of action. The earlier they assess the risk factors, the sooner they can begin mitigation efforts.

What to Look for in a Transportation Supply Chain Risk Solution

Not every piece of technology is the same, however. Many still lack artificial intelligence and are therefore unable to gather all of the required data to inform a decision. Some look at only weather and disregard infrastructure issues. Others are unable to present the data in a way that companies can easily see where their risk factors are, how severe they may be and the likelihood of them occurring. Having this capacity enables leaders to make faster and more precise decisions, reducing knee-jerk responses and overreactions to risks that have little chance of causing disruptions.

When looking for automated technology to support proper transportation management, the transportation supply chain risk solution must have 3 things:

  1. Predictive analytics based on past and real-time data
  2. Integration with shipment data
  3. Multimodal capacity to see rail and over-the-rail shipments

Using the right technology, companies can understand their risks before they ship. This is a key differentiator in being able to guarantee shipments just-in-time. Without it, they are at the mercy of all of the risk factors that plague the transportation supply chain.

The Goal of a Transportation Supply Chain Risk Solution

Remember, the goal of a transportation supply chain risk solution isn’t to just add another piece of technology to your stack. It’s to give you the visibility you need to make better decisions. When the technology is working for you, you are able to see more clearly where you can make an impact.

Deliver better service

Your customers, no matter where they lie in the supply chain, depend on your shipments. Whether they are waiting on a part to complete the manufacturing process or they are the consumer waiting on a final product, your ability to ship product on time as expected determines whether or not they receive what they ordered. With AI-powered technology, you can instantly see not only where your risks lie, but also when those risks could delay a shipment per mode and schedule. You can share this data with your carriers and third-party logistics partners to either adjust schedules or set proper expectations to retain customer satisfaction.

Prevent lost loads

Lost loads interrupt the supply chain and cost more than $50 billion annually. Lost loads may include partially-delivered freight, damaged freight or freight that was picked up but never delivered. Whichever the case, lost loads are never a good thing. Technology, however, helps users find areas of risk that often lead to lost or damaged loads, helping them to make good on their OTIF programs.

Related: OTIF Programs: What You Need to Know to Nail On-Time In-Full Performance Metrics

If, for instance, a hurricane is predicted to impact a Gulf state, the technology would go further than presenting basic hurricane prediction models. Instead, it would evaluate surge, flood, wind, tornadic, hail, lightning and other data along the entire hurricane track, even as it moves inland for days or even weeks. Companies can then make informed decisions on when, how and where to ship to avoid these hazards.

Optimize freight spend

As profit margins continue to get squeezed, the transportation supply chain must get smarter. Freight spend was at an all-time high in 2017, a record $1.5 trillion. Companies can reduce overspend, however, when they use the right technology o determine where the real risks reside. Refrigerated trucks, for example, may not be needed when AI-embedded software determines the air temperature along a lane will be low enough to keep the sensitive freight at a constant, required temperature. You can also replace your seasonal lane calendar with more flexible recommendations.

Improve quality

Not every shipment makes it to its destination on time and as expected, even with your best intentions. In order to continually improve your practices and customer service, you must be able to identify shipments that are at risk of being compromised. If found early enough, you may be able to mitigate those risk factors. If not, however, you need accurate data to perform root-cause analysis on lost loads to fix the underlying problem instead of only making amends and repeating the offense. This proactive step goes a long way in remediating any damage to your reputation or customer satisfaction.

Managing risk within the transportation supply chain has never had a more optimistic outlook. With the utilization of software that leverages artificial intelligence, companies along the supply chain can have greater confidence in their ability to deliver on time and on budget as expected. Let technology transform your capacity for real-time risk monitoring across your supply chain so you can be more proactive and responsive in how you schedule shipments using the right mode of transportation.

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